The role of sanctions and their effects on performance rankings of companies in the basic metals industry

accepted in Tehran Stock Exchange

1-Abdol Hamid SafaeiGhadikolaei, PhD in Industrial Management, Associate Professor University of

Mazandaran

2-Mahmoud Yahyazadehfar, Ph. D in Financial Management, Professor University of Mazandaran

3- NimaNouripour M.A Student of Industrial Management, University of Mazandaran

In The Name Of God

With regard to the sanctions applied against the Islamic Republic of Iran, evaluation of performance and ranking of active companies in the basic metals industry accepted in Tehran Stock Exchange were studied before and after tightening sanctions, and performance ranking of companies was compared before and after the intensification of sanctions in the relevant industry.

ABSTRACT

Different studies highlighted various criteria for performance evaluation of companies that is possible to apply suitable criteria depending on management understanding of the company. Concerning the viewpoints of financial experts, the present study uses Thirteen criteria including:

return of assets (ROA) , return of equity (ROE) , operating profit growth (OPG) , price to earnings ratio (P/E) , economic value added (EVA) ,

market value added (MVA) , cash value added (CVA) , refined value added (REVA) , true value added (TVA) , Tobin’s Q , created shareholder value (CSV) , percentage of non-members’ possession of board of directors and

the percentage of institutional investors.

CRITERIA OF PERFORMANCE EVALUATION

One of the methods of extracting the significance weight of criteria in

decision making with multiple criteria is Shannon entropy.

The benefit of this method in relation with other methods of extracting

the significant weight is the fact that it is completely an objective

method, and it does not include the orientation of experts’ comments

DETERMINATION OF SIGNIFICANCE DEGREE OF SUB-CRITERIA WITH GREY SHANNON ENTROPY

“Decision making matrix” includes information that entropy can be applied as a criterion for its evaluation. Assume that decision making matrix is as

follows:

GREY SHANNON ENTROPY

As to this matrix, pij is calculated as follows:

Relation 1:

And entropy of indicator i is calculated with the following relation:

Relation 2:

GREY SHANNON ENTROPY

is calculated as the following:

Relation 3:

Then weigh is calculated:

Relation 4:

GREY SHANNON ENTROPY

Sub-criteria of performance evaluation

WjSub-criteria of performance

evaluationWj

X1 )ROA (return of assets [0.0018 , 0.1557] X9 Refined value added (REVA) [0.0017 , 0.0351]

X2 Return of equity(ROE) [0.002 , 0.0531] X10 ) Tobin’s Q( [0.0026 , 0.1318]

X3Operating Profit Growth

(OPG)[0.0003 , 0.048] X11

Created Shareholder Value (CSV) [0.0025 , 0.0656]

X4 Price earnings ratios (P/E) [0.0031 , 0.0386] X12Percentage of non-members

managers [0.0013 , 0.1316]

X5 Economic Value Added (EVA) [0.0011 , 0.0497] X13Percentage of institutional

investors [0.0008 , 0.0719]

X6 Market Value Added (MVA) [0.0026 , 0.0631]

   X7Cash Value Added

) CVA([0.0017 , 0.0937]

X8True Value Added

) TVA([0.0008 , 0.0627]

SIGNIFICANCE DEGREE OF SUB-CRITERIA OF PERFORMANCE EVALUATION

Grey system theory, is an algorithm that analyzes uncertain relationship of member of a system with a reference

member and it has the ability of solving multiple criteria decision making. Grey relational analysis process is

detailed as follows:

In a multi indicators decision making problem which has m options and n indicators, Ith option can be expressed as is performance vale of indicator j for option i. Yi can be change into comparative series with help of one of the (1),(2) or (3) relations.

GREY RELATIONAL ANALYZE

1-GREY RELATIONAL GENERATING

1-GREY RELATIONAL GENERATING

This paper defines reference sequence definition as and then searches an option which its comparative series are

nearer to this reference sequence definition.

Grey Relational coefficient can be calculated using relation (4):

2- REFERENCE SEQUENCE DEFINITION

3- GREY RELATIONAL COEFFICIENT

After calculating of all gray relational coefficients, Grey's relational grade can be calculated using relation (5):

4- GREY RELATIONAL GRADE

differentiation coefficient 0.5

company degree grade

Calsimin 0.663895 1

National Iranian Copper Industries 0.620981 2

Sepanta 0.574913 3

Amir Kabir Kashan Steel 0.573194 4

Fromolibden Kerman 0.544223 5

National Lead and Zinc 0.543736 6

Lole & Mashin sazi 0.53447 7

Alomorad 0.529015 8

Mobarake Esfahan Steel 0.5185 9

Alomtak 0.513857 10

Sar Toska Steel 0.511154 11

Navarde ghataate Foladi 0.506226 12

Iran Aluminum 0.505604 13

Foroselis Iran 0.502873 14

Kavian Steel 0.501193 15

Tajhizate Sadid 0.499988 16

Bahonar Copper 0.496686 17

Navard va Lole Ahvaz 0.489644 18

Navard Aluminum 0.484878 19

Sanati Sepahan 0.449512 20

RANKING OF COMPANIES IN THE BASIC METALS INDUSTRY BEFORE THE INTENSIFICATION OF SANCTIONS

According to the results in the tables Calsimin

Company is chosen as a company with best performance and

maximum grading in basic metals

accepted In Tehran Stock Exchange

before the intensification of

sanctions 2002-2007.

differentiation coefficient 0.5

company degree gradeNational Iranian Copper Industries 0.642336 1

Alomorad 0.611276 2National Lead and Zinc 0.610953 3

Alomtak 0.608952 4Foroselis Iran 0.600502 5

Amir Kabir Kashan Steel 0.579112 6Tajhizate Sadid 0.574761 7

Calsimin 0.562157 8Navarde ghataate Foladi 0.560885 9

Kavian Steel 0.55559 10Navard Aluminum 0.540619 11Bahonar Copper 0.535444 12

Mobarake Esfahan Steel 0.534093 13Iran Aluminum 0.533305 14Sar Toska Steel 0.526056 15

Lole & Mashin sazi 0.516715 16Sepanta 0.516042 17

Fromolibden Kerman 0.509486 18Sanati Sepahan 0.498603 19

Navard va Lole Ahvaz 0.4647 20

RANKING OF COMPANIES IN THE BASIC METALS INDUSTRY AFTER THE INTENSIFICATION OF SANCTIONS

According to the results in the tables National Iranian Copper Industries Company is chosen as a company with best performance and maximum grading in basic metals Industry in the Tehran Stock Exchange during the years 2008-2013.